Envisioning a New Future for Crystal City

James E. Creedon, a senior vice president at Charles E. Smith Commercial Realty, has a big hole to fill in Crystal City.

Over the next few months, the U.S. Patent and Trademark Office will begin moving employees out of several concrete buildings it has occupied in Crystal City for more than two decades into new headquarters in Alexandria. Within two years, the patent office, the biggest tenant in Crystal City, will vacate nearly 1.9 million square feet, almost as much space as the Empire State Building.

Over the past year, Creedon said, he and a seven-person sales staff have done 100 "dog-and-pony shows" to attract brokers and potential tenants to the PTO space.

Creedon's success rate: He has signed one lease to put the General Services Administration's Federal Supply Service, which provides pens, paper, furniture and other items to the government, into 280,000 square feet. That leaves 1.6 million square feet to fill.

"It's been a challenge," Creedon said, adding that he has two other potential tenants, a nonprofit that may take 140,000 square feet and another nonprofit that may use as much as 60,000 square feet. He declined to identify them.

Several factors have complicated Creedon's task. Crystal City has a reputation as a location for government agencies and their contractors. It has little street life because many of its restaurants and shops are underground. There are many empty office buildings in Northern Virginia, which is still trying to recover from the collapse of the technology sector a few years ago.

In addition, few tenants are looking for big chunks of space, brokers say. One potential tenant, Public Broadcasting Service, is looking for a large space and considered Crystal City, according to its broker, who declined to disclose PBS's decision.

Another potential tenant, the Corporate Executive Board, a research group in the District, is close to signing a deal to move into a JBG Cos. project in Rosslyn, according to sources close to the deal. They asked not to be named because the negotiations are confidential.

The U.S. Environmental Protection Agency considered Crystal City but signed a lease in May for 400,000 square feet at Potomac Yard, south of Crystal City. EPA will be the largest tenant in the $2 billion Potomac Yard office, residential and retail complex, which is set to open in 2006. The project's developer is Crescent Resources LLC of Charlotte.

"The fact that Crystal City didn't get the EPA deal was tough and disappointing for them because they lost a 400,000-square-foot tenant," said broker Spencer R. Stouffer of Trammell Crow Co. "Now, Crystal City has to compete with the Potomac Yard project right nearby."

Creedon's pitch is that Crystal City is lively and its location convenient. His 20-minute PowerPoint presentation on a large, flat-screen TV in his Crystal City office shows photos and pictures of Metro riders getting off at Crystal City next to shots of cars on nearby highways. There are photos of buildings bearing the names of such major contractors as Science Applications International Corporation (SAIC), Boeing Co. and Lockheed Martin Corp., and of passersby eating at Morton's and drinking Starbucks coffee.

"We've got transportation with Metro, a VRE [Virginia Railway Express] station, access to highways, we're close to Reagan National Airport," Creedon said. "There's apartments and condos all around and hotels, shops. And we're putting in [1,300] free parking spaces, and we've got some of the best restaurants around."

Creedon said he hoped Crystal City's commercial rental rates, which he said were about $10 to $30 per square foot lower than for similar spaces in the District, will make tenants want to relocate.

Crystal City, about a five-minute car ride from the District and just west of National Airport, is the core of Charles E. Smith Commercial Realty, which was founded in 1946 by Russian immigrant Charles E. Smith, who retired in 1967 and died in 1995. Beginning in the early 1960s, the firm built much of the Crystal City neighborhood. It now owns 7.5 million of the 10 million square feet in Crystal City.

Its two main thoroughfares -- Jefferson Davis Highway and Crystal Drive, which run parallel -- are home to tall office buildings, 12 hotels and towering apartment and condo complexes with 4,500 units. The shops and restaurants are mostly underground. Someone can live in a Crystal City condo and shop, eat and go to work through underground tunnels without ever going outdoors.

Creedon's firm spent $40 million to make the streets more vibrant. It gutted parking decks, turning them into a strip of restaurants that includes Jaleo, McCormick & Schmick's and an Irish sports bar. The firm also made the streets two-way, put up more signs pointing to major highways and to the Metro, and planted flowers and trees to make the area not seem like a "concrete canyon," Creedon said.

"They have to overcome a cultural image that Crystal City had for over 30 years," said Raymond A. Ritchey, executive vice president of developer Boston Properties Inc. "The image was that Crystal City was only for government and its contractors. However, [Charles E. Smith] is going to make all the right moves with expanding the retail base to make it as competitive as possible with other areas like Rosslyn and D.C."

Closings

The national tax group of the large accounting firm Ernst & Young LLC has signed a letter of intent to lease 140,000 square feet in an office building at 1101 New York Ave. NW. Louis Dreyfus Property Group of New York said the 10-year lease means the firm can get financing to start building a 385,400-square-foot building at 11th Street and New York Avenue.

Construction will start in November and is expected to be completed by 2006.

The tax group is moving from offices at 1225 Connecticut Ave. NW.

Dana Hedgpeth writes about commercial real estate and economic development. She can be reached at hedgpethd@washpost.com.

James E. Creedon of Charles E. Smith, which developed much of Crystal City, has high hopes for its turnaround.